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Axie Infinity: Business Breakdowns ResearchPrimary Research SourcesAxie Infinity White PaperAxie marketplace data - the main channel for players trade AxiesAxie economy statistics for volume, revenue, etc.: 1st source, 2nd source, 3rd sourceus,L LCBy: Anastasia SolonitsynaCompany History & Key PeopleAxie infinity is a NFT game powered by the Ethereum blockchain and described as a cross betweenCryptoKitties and Pokemon. It was launched in early 2018 by 3 people who met in 2017 because ofCryptoKitties. The team now consists of 50 full-time employees and has its headquarters in Ho Chi Minh City,Vietnam. The founders came up with the idea for Axie Infinity after realizing how unsustainable crypto kitties and otherblockchain games were at the time. None of these games had economic incentives that aligned with long-termgrowth. The founding team now consists of 5 people, all of whom have been on the front lines of gaming economicssince they were kids:loss Trung Nguyen (CEO) - co-founded a multimillion-dollar Vietnamese ecommerce startup when he was 19Coyears old (Lozi.vn) Aleksander Leonard Larsen (COO) - a competitive Warcraft3, Dota and Dota 2 player and is the founder ofsome of the largest gaming communities in Norway Jeffrey Zirlin (Growth Lead) - has a history degree from Yale and was once one of the best WoW players inthe United States Andy Ho (CTO) - worked as a software engineer at Anduin Transactions and interned at Google and Paypal Tu Doan (Art Director and Game Designer) - he designed the original Axies. He co-founded and formerlyworked as the Head of Design at Lozi.vnMilestones Early 2018: The team founded Sky Mavis, a for-profit software company based in Vietnam that develops AxieInfinity and a suite of other blockchain gaming products and services Sky Mavis to date has secured 9mn in VC funding (see breakdown below) 2021 Colossus, LLC. All rights reserved.
1.5 million raised in two seed rounds in 2019 with some notable investors: Hashed, Animoca Brands(also an investor in Cryptokitties and Binance), Consensys (a NY blockchain-based company developinginfrastructure and dapps for Ethereum and founded by Ethereum co-founder Joseph Lubin), etc. 7.5m Series A round in May 2021 with investors including: Libertus Capital (also invested in Ledger andZapper), Collab Currency (also invested in Coinbase, Kickstarter, Lyft), etc.2018-20 product timelineLC Source: Axie Infinity WhitepaperApril 2021: Axie Infinity migrated from the Ethereum blockchain to Ronin Side Chain. (Side note: Ronin is aJapanese word for “samurai without a master”)us,L loss Created by Sky Mavis, for the sole purpose of hosting Axie Infinity.Source: Axie Infinity Whitepaper Axie's native token did not see much price action from its 2018 launch until Ronin was introduced. Axie’ssingle-day trading volume began to skyrocket after the migration. Through this migration, Ethereum’s high gas fees were removed for users and the transaction settlementCotimes were reduced to seconds. To secure Ronin’s security Sky Mavis is planning on making Ronin a public blockchain, meaning it will haveits own token that can be staked by validators. 2021: Axie is the fastest growing game in the world; the top decentralized application (dApps) on Ethereum;and the #1 NFT product by daily volume (see 'Key metrics')Business Model & Secret Sauce Axie Infinity is a community-driven digital pet game which allows players to earn money while battling,breeding, raising, and trading digital pets called Axies. Axies fall into one of nine categories that are similar to Pokémons. Each Axie has six of 500 possible bodyparts. Each of the body parts has three genes: dominant, recessive, and minor recessive. The combination ofAxie's features determines its win rates and, eventually, return on investment. 'Play-to-earn' (P2E) appeal Axie Infinity is a first-mover in the new play-to-earn space. P2E allows for an open economy within a gamethat provides financial benefits to the players. 2021 Colossus, LLC. All rights reserved.
P2E has been done in traditional games: some players in World of Warcraft, Onmyoji, etc. make money byselling equipment. But traditionally, in-game asset transactions exist only in the game ecosystem, and it isdifficult to trade those digital assets outside. In blockchain games, by actively participating in virtual economies, players can earn rewards, such as in-game assets and tokens, which can then be traded or sold on the open market for other cryptocurrencies orfiat money. The benefit of the new play-to-earn business model is that a gamer always creates some value that theycan sell. Even when a gamer needs to pay to start playing, these acquired items can be sold again. Allobtained items represent a certain value.lossus,LLCHow the Axie Economy works (Players, Token holders, Sky Mavis)Source: Axie Pulse CoPlayersGetting started isn’t straightforward (which brings to mind Gabe Leydon’s broken but growing idea).it requiresacquiring ETH signing up for a MetaMask wallet transferring ETH downloading another wallet (Axie’sown Ronin wallet) transferring ETH again acquiring NFTs on Axie’s own NFT marketplace (see below),logging in with MetaMask downloading the application itself, on desktop or mobile.And, it costs money to start: You need to buy 3 Axies from the Axie Infinity marketplace to start playing. The cheapest Axie w/o abilitiescurrently costs 200 which implies a minimum 600 investmentUsers can opt to borrow Axies from managers and pay them a portion of their earnings (passive income formanagers). It is currently done peer-to-peer.By participating in the game, players earn AXS and SLP tokens (See ‘Tokenomics’) by: Winning battles and challenges (earn SLP) SLP tokens are earned when a three-Axie team successfully defeats a foe in PVP (player-vs-player) or PVE(player-vs-environment) challenges. Breeding and selling Axies (earn ETH / fiat / AXS) 2021 Colossus, LLC. All rights reserved.
To meet the demand from new players, who each need three Axies to play, existing Axie holders breed newAxies from a pair of existing ones. Total breeding cost fixed cost (not related to the number of reproductions, pay in AXS) variable cost(related to the number of reproductions, pay in SLP). To ensure that the Axie population remains stable and sustainable, there is a limit on the number of times anAxie can be bred. This number is currently seven with each additional reproduction requiring more SLPtokens. ETH / are earned when new players buy current players’ Axies through the marketplace, but can be paid inAXS too. AXS Staking (earn AXS) Players receive newly created AXS (see ‘Ownership economy’ section) if they lock up their tokens in thegame and actively participate in the game by voting and playing regularly.LCUsers playing Axie Infinity can earn 10-20 (recently closer to 50-60 due to the AXS and SLP tokens’ priceincrease) a day.Axie token holdersEarn by speculating. SLP holders might want to hold on to their SLP to speculate on the price.Exchange for Fiat. Both AXS and SLP are currently tradable on major decentralized exchanges (DEX) likeUniswap. In the near future, they may be able to do so on Axie’s own DEX. Many players earn SLP, exchange itfor money to pay their real-world bills.Axie Infinity team (Sky Mavis)Sources of income: us,L Collecting fees. Sky Mavis takes a 4.25% cut of revenue when players trade in the marketplace (e.g. breeding lossaxies and selling axies) and they earn 2 AXS whenever an Axie is bred. This goes to Community Treasurywhere they hold stake, see ‘Ownership Economy’.(n.b. primary sales: i.e. selling Axies and land directly could be a future revenue stream but has not been donefor a long time. They prefer to let the players generate most of the revenue initially. Once the network is largeenough they can potentially increase the take-rate.)Demand/Supply dynamics in the economy If the quantity of new players declines the purchase of new Axies decline excess supply of Axies breeding activity decreases reducing SLP/AXS demand and priceCo If the quantity of new players grows the purchase of new Axies grows Axie prices go up breedingprofitability goes up SLP/AXS demand for breeding increases SLP/AXS prices go upTokenomics1. Axie Infinity Shards (AXS) Launched in November 2020 and acts as the default currency for the Axie Infinity ecosystem. The interplaybetween Axie Infinity's rising popularity among gamers and its booming revenue has helped AXS to becomeone of the top-performing digital assets in 2021. The AXS token’s main utilities are ( more use cases to be added in the future):a. Payment: AXS is accepted as currency within the Axie NFT marketplace (for buying and selling Axies andpaying trading fees) and holding AXS may also be required for some protocol-initiated sales/auctions.b. Staking: players can lock-up their tokens in the crypto protocol. If they do so, they will receive weeklyrewards, subject to a 12-month unlocking period. Users who are staking AXS tokens can increase these 2021 Colossus, LLC. All rights reserved.
reward amounts through participating in governance and playing the game. In the future, staking users mayalso receive NFT rewards or vote for portions of the Community Treasury to be distributed to stakers (kindof like equity holders voting for dividend distributions).c. [Future] Governance: the Community Treasury went live in early 2021 and is amassing revenue. In thefuture, this treasury will be governed by AXS stakers once the network is more decentralized (see sectionus,LLC'Ownership Economy')Source: Axie Infinity Whitepaper The maximum supply of AXS is limited at 270m which is being unlocked in a pre-determined schedulelosslasting 65 months from the public sale in November 2020. The initial circulating supply was set to 60m ofAXS and currently there is 88m in circulation. Sky Mavis (the team behind Axie) have ring-fenced theComajority of the allocated AXS supply - 56.7m (21%) which will be unlocked gradually over 4.5 years.Source: Axie Infinity2. Smooth Love Potions (SLP) 2021 Colossus, LLC. All rights reserved.
Earned in-game, required to breed new pets and participate in Axie Infinity events and competitions.Unlike AXS it has no initial allocation. It was minted from zero by Axie Infinity players, which technically meansit’s a fair launch cryptocurrency. 100% of SLP that exists is also in circulation and they are continually earned inthe game. They are also burned whenever an Axie is created. And each Axie needs more SLPs each time itreproduces (until it reaches the limit of seven reproductions). SLP value is tied to the amount of breeding that’s taking place in the game. The more breeding that happens the higher the value of SLP and vice versa.Ownership Economy (via Community Treasury) All the fees and revenue generated by Axie Infinity are placed in the Community Treasury which is governed byAXS holders. The AXS token provides a stake in the Axie universe (alike to company shares). It will allowplayers to share the economic success of the game. The treasury’s total revenue has increased from 1mn at the end of April to 15mn in June and to 530m LCnow - see the data here.AXS staking (to be launched in Q3 ‘21) - another dimension of demand for the AXS token. A player is going tostake their AXS for one year to earn rewards. AXS staking rewards will weigh on how much you’re playing thegame and how often you vote in governance proposals and community treasury spends In order to progressively decentralize - as more AXS tokens are unlocked over a 65 month schedule, Sky MavisFuture Visionus,Lwill slowly lose voting power, until it loses its majority some time in late 2023.The endgame is to create a Game-as-a-Service model with a single application to interact with the Axie Infinityuniverse which will include: The team wants Axie to become the first game truly owned and operated by the community that plays it. Future projectslossThe team is dedicated to the core values of cryptocurrency. Their vision is to create a virtual economy whereyou can own and operate your own businesses, save, invest, and spend your money without ever having totouch a bank.Progression of Axies, Breeding Game, PvP with ladder and tournaments, PvE/Adventure. New gameplay and features: Sky Mavis now possesses a clear track record of impressive iteration inresponse to community feedback. Over time, Axie can potentially earn revenue from selling Axies, Land,cosmetics, and in-game consumables. Additionally, there will be fees when players want to level up theirCogame characters, play in tournaments, and craft new assets. Axie Land Land is an upcoming game mode that will unlock further utility for Axie game assets. Lunacia, the Axie homeland, is divided into tokenized plots of land which act as bases of operation fortheir Axies. It consists of over 90,000 plots of customizable tokenized land called terra. Same as Axies,players can directly trade in ETH in the Marketplace. The owner of the land can get rewards in the land,such as AXS generation. Land features in Lunacia will be fully implemented by the end of 2022, and these include a Lunacia SDKwhich will serve as a map editor to facilitate the creation of in-game content. Axie Infinity is still in the process of rolling out Lunacia even though the first-ever land sale took place inJanuary 2019. Lunacia land is scarce relative to the number of players. As a result, the cheapest plot ofland on the Axie Infinity marketplace is currently listed for 7k. The largest sale for 1.5m took place inFebruary 2021. New sources of external capital into the ecosystem such as: advertising fees and sponsorships, Nonprofitorganizations, Government donations and grants 2021 Colossus, LLC. All rights reserved.
Own blockchain & Ronin Blockchain Token: Sky Mavis plans to ultimately make Ronin its own publicblockchain complete with its own Ronin token. Co-founder Aleksander Larsen recently stated that the planis for the Ronin token to be distributed primarily to the community, not whales or VCs, i.e. Sky Mavis wantsthis Ronin token to also be a “fair launch” token. Native & Decentralized Exchange (DEX): Sky Mavis is building a decentralized exchange on Axie. In thisDEX, users will swap in-game resources. There is no timeline for this.Key metricsYTD, the number of Axie Infinity DAU has grown from 16,000 to 1.7 million.DAU by country:us,LLC Source: Similar WebAxie Infinity is the most traded NFT collection, with a total trading volume of 1.7bn. Coloss Source: DappradarAxie NFT’s marketplace volume is second only to the internet’s most popular NFT digital art marketplaceOpenSea (which hosts a number of collections across different categories). 2021 Colossus, LLC. All rights reserved.
Source: DappradarMarket capitalisation: AXS - 3.9bnAxie ERC721: Among one of the earliest NFTs ever created, even before the NFT standard was official. AmongLC the top traded projects on Ethereum and it took off even further once we migrated to Ronin.Holds the record as Ethereum’s first NFT game to generate 1 billion in sales.One of the largest Discord servers across the world.us,L RevenueAxie’s protocol revenue currently stands at 530 million YTD, almost 2x that of Ethereum (click). 85% come from Axie breeding fees, paid in AXS to the Community Treasury.loss 15% comes from a 4.25% trading fee taken from sales of Axie NFT assets: Axies, land, and land items.Co 2021 Colossus, LLC. All rights reserved.
LCus,LlossSource: Axie WorldCompetitive PositionSecret Sauce Network effects: Axie Infinity has 1m global DAU, and the availability of Managers (who fund player entry intothe game by lending in-game assets) helps to maintain a strong momentum of spread. The “Scholarshipmanager-player” structure has the potential for viral expansion and enhances network effects. The adoptionrate is explosive despite a complicated UX experience and high cost to play. Simplifying onboarding experienceand a mobile app launch can further contribute to growth.Co Property rights: Although not exclusive to Axie, property rights incentivize players to act more like foundersand employees rather than users. These rights include being able to sell your game assets to anyone in theworld, earning liquid tokens for playing/contributing, and being able to own a piece of the game you’re playing.Traditional video games extract value from their players via centralized, in-game purchases. Axie players makepeer-to-peer purchases. “I think one of the things our players really like is that 95% of the value that flowsthrough the game is going to them".Switching costs: For traditional online games is relatively low. For Axie players, switching to another game ismore expensive, both because of Axie’s high start-up costs and the emotional cost of the way the game isstructured.Open-source, expanding and vertically integrated ecosystem New routes. Axie’s native infrastructure currently includes wallets, gameplay, NFTs (including virtual land),native currency (SLPs and AXS), and a decentralized exchange. Axie’s future plans include turning the 2021 Colossus, LLC. All rights reserved.
sidechain into its own native blockchain, lending/scholarship programs, an open-source platform for furthergame development, tax assistance, banking services etc. Loyal existing players. Many feature ideas that can drive non-monetary value for players, such as Landgameplay, Crafting, Soulbound Axies, Collection Goals, Cosmetics, Virtual Pet gameplay, etc. This is the way Axie Infinty has the opportunity to become a metaverse in the future. Axie will have the criticalmass of users to support an ecosystem built within its universe.Blockchain economy Fast & affordable blockchain transactions: There are very few sidechains on Ethereum and none of them werebuilt to service a specific protocol. Axie’s foresight in building Ronin drove Axie’s explosive growth. Native wallet: Users can store and transact their assets on the Ronin sidechain with Axie's native wallet. Jihorecently mentioned that a traditional bank is looking to integrate with Ronin. This bank might help users tracktheir taxes through the native wallet. “[The next generation] is going to skip banks, they are going straight toLCdigital wallets”.Market opportunityGaming is the largest segment of the entertainment industry (click) with 180bn according to IDC (anothersource: 160bn revenue in 2020 and 2.3bn players according to Newzoo, see the chart).Colossus,L Source: newzooNFT gaming - the future of playing video games The sales volume for NFTs hit 2.5 billion in the H121, up from a total of 250mn in FY20 (click). At themoment, the most popular crypto application for NFTs is gaming. 2021 Colossus, LLC. All rights reserved.
Competitive landscape LCus,LSource: Young PlatformThere are no direct competitors but similar players exist in a similar field. Sorare and Gods Unchained createColossthe utility of their NFTs more indirectly, through paying out prizes in tournaments (rare NFTs and ETH). AxieInfinity is the only game that introduces a governance token on top of an in-game currency.Source: Outlier Ventures Unsurprisingly, perhaps, there are clear copy-cats being made, like https://monstainfinite.com/ which will beinteresting to follow. Some other players: F1 Delta Time (collection and trading of unique Cars, Drivers, and Components); TheSandbox Game (play, build, own, and monetize virtual experiences); League of Kingdoms (MMO strategy game. 2021 Colossus, LLC. All rights reserved.
Gamers fight for dominion within the game); Illuvium (a fantasy battle game); Star Atlas (Gamers perform spaceexploration, territorial conquest, political domination)Risks Demand driven by new players. If Axies reproduce excessively and/or new players' growth slows, it will causethe price of Axies to fall, which in turn will affect the demand for SLP and the demand for AXS. Gamers are fickle ("fad risk"): viral games are typically trendy and the preferences of the masses can shift.Will players in the USA and Europe like Axie enough for it to reach mainstream adoption there as well? No underlying storylines: Unlike PokemonGo, Axie appears to be missing a complete cultural universe of TVshows, movies, trading cards, and memories. Axie’s narrow cultural band may increase its risk of becoming afad.Axie isn’t fully decentralized: Currently, the gameplay and data storage of Axie infinity are not decentralized.Regulatory: Recently, regulators in the Philippines shared their intent to tax the game's publishers and players.Useful ResourcesTypeNFT Gold Mine. Axie Infinityspeaks outVideoHow Axie Infinity BoostedRevenue 400% in 30 DaysVideoGabby Dizon - Mapping theMetaverse EconomyColossusIs Axie sustainable?Descriptionus,LTitleLC Linkhttps://www.youtube.com/watch?v 27ZHnbkDKWIAleksander Larsen, co-founder and COO ofAxie Infinity, discusses Axie Infinity’s infinityboosted-revenue-400-in30-days/Conversation with Gabby Dizon, co-founder ofYield Guild Games, that covers theplayer/manager relationship with games likeAxie 88185/dizon-mapping-themetaverse-economy?tab transcriptArticleA look into Axie Ecosystem and thesustainability of its business nitysustainableAxie Infinity (AXS): TheCraziest Crypto Game Ever!ArticleThe numbers, economics and recipe forsuccess of the biggest NFT and crypto relatedgame in historyhttps://medium.com/general -ever-a28322b5601bNFTs and Gaming Lead theETH RallyArticleThe article maps out the basics of the NFTspace, and assess the volume and demandmetrics describing its meteoric ng-leadthe-eth-rally/Thoughts on gamingeconomics, NFTs and theMetaverseArticleA dive into the economics of the metaverse and he challenges on the path to sustain its50881.htmleconomic viabilityInfinity Revenue, InfinityPossibilitiesArticlePacky McCormick dives into Axie Infinity andthe play-to-earn gaming revolution.ColossInterview with Jeff Zirlin, a co-founder, on thecatalysts of Axie take-off in 2021 and theteam's future plans 2021 Colossus, LLC. All rights ue-infinitypossibilities
game assets and tokens, which can t hen be traded or sold on t he open market for ot her cr yptocurrencies or fiat money. The benefit of t he new play-to-earn business model is t hat a gamer always creates some value t hat t hey can sell. Even when a gamer needs to pay to sta
![Installation guide for the Infinity system]](/img/12/sentex-infinity-inst.jpg)
